Aecon joint venture awarded $2.75-billion nuclear contract

Aecon Group Inc (TSE:ARE, Mkt cap 786.42M, P/E 25.79, Div/yield 0.10/2.88, EPS 0.54, Shares 56.54M) has announced that it has secured half of a C$2.75 billion (US$1.94 billion) contract to carry out the refurbishment of the Darlington nuclear power station in the Canadian province of Ontario.

Aecon Group Darlington nuclear power station

Aecon joint venture awarded $2.75-billion nuclear contract for the refurbishment of the Darlington nuclear power station

Ontario Power Generation awarded the other half of the 50/50 joint venture to SNC-Lavalin Nuclear Inc. in a deal that will see the two companies work on replacing the main reactor components.

The tools and methods the two firms will use to carry out the project will be gleaned during the definition phase, also undertaken by a 50-50 joint venture between SNC-Lavalin and Aecon.

In order to minimise disruption, each of the Darlington station’s four reactors will be taken out of service sequentially for about three years. This will allow the firms to work on replacing the fuel channels, feeder pipes, calandria tubes and end fittings.

The execution phase is targeted to commence in 2016 and will take approximately ten years, Aecon said. It also confirmed that Aecon’s $1.375 billion share of the contract will be added to its Energy segment backlog in the first quarter of 2016.

“The Darlington nuclear refurbishment project will contribute significantly to the economic vitality of Ontario while ensuring the supply of emissions-free and reliable baseload electricity,” said Teri McKibbon, president and CEO, Aecon Group Inc.

“This project illustrates Aecon’s industry-leading, highly skilled nuclear and fabrication expertise, which bodes well for Aecon’s ability to leverage our capabilities in the specialized global nuclear market.”

The project has been in the works for nearly four years, added Sandy Taylor, president, Power, SNC-Lavalin.

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